Why is Employee Financial Wellness Important & How to Improve it?

As someone who's spent years working with companies and their employees, I've seen firsthand how financial stress impacts people's lives.

It's concerning to me that 78% of employees are living paycheck to paycheck. It’s like 8 out of 10 of your colleagues are barely getting by. Even more troubling is that 60% of workers say money worries are their biggest life stressor.

I've observed how this stress doesn't stay at home. It follows people to work, affecting their productivity and focus. I've seen talented employees look for new jobs simply because they're overwhelmed by financial pressure.
That's why I'm here to share my insights on why financial wellness matters and how we can help our employees get back on track.

What is Financial Wellness?

In my experience, financial wellness goes far beyond having money in the bank. It's about feeling secure and confident about your financial life. I like to think of it as having the peace of mind that comes from managing expenses wisely, building savings, and handling debt without lying awake at night. When you're financially well, you know you can handle unexpected costs without panic.

Think of financial wellness as a balanced approach to money. It includes budgeting to make every dollar count, saving as a safety net, and managing debt so it doesn't weigh you down. When you feel financially secure, you're not just surviving but thriving. According to Forbes, financially healthy employees are up to 20% more productive.

Financial wellness isn't a one-time achievement—it's an ongoing journey. Every smart choice you make with money brings you closer to a life where your finances support your dreams, not limit them. Ready to take control? Your financial future is worth it.

8 Employee Financial Wellness Statistics

Throughout my career studying employee financial stress, I've found it to be a silent productivity killer. And yet, it often flies under the radar. But when you see the numbers, it's impossible to look away. Let’s dive in.

1. Financial Stress Costs Companies Big Time

Financial stress costs a staggering $1,900 per employee each year. That impacts the entire workforce. This stress isn't just a number; it directly results from employees grappling with daily financial challenges.

Source: John Hancock, 2019

2. Productivity Takes a Hit

Employees spend 13 hours per month worrying about personal finances at work. Most employees find themselves distracted by financial concerns during work hours, which affects their ability to focus on day-to-day productivity.

Source: Mercer, 2017

3. Mental Health Is in the Crosshairs

A third of employees (34%) say financial stress negatively impacts their mental health. And when mental health suffers, everything suffers. This is especially true for those stressed about their finances due to overwhelming debt or lack of savings.

Source: PwC, 2022

4. Millennials and Women Are Feeling It More

Financial stress doesn't discriminate, but it hits younger employees and women harder. These demographics often struggle with student loan debt, making financial planning even more challenging.

Source: PwC, 2022

5. Financial Wellness Programs Are a Win-Win

A jaw-dropping 90% of employers believe financial wellness programs boost productivity, improve well-being, and even reduce medical claims.

Source: EBRI, 2022

6. Workers Are Asking for Help

63% of employees want their employers to provide emergency savings accounts. And it's not just a nice-to-have; it's a must-have. This is especially true compared to a few years ago when such benefits were less common.

Source: Salary Finances, 2022

Thus, these statistics clearly show the importance of financial wellness initiatives for employees and employers. It's time to act now.

Why I Believe Employee Financial Wellness is Crucial?

I've seen how financial stress acts as a silent productivity killer. In a recent survey done at my workplace, I observed that employees dealing with money problems are twice as likely to miss work and 34% more likely to arrive late. What troubles me most is seeing people physically present but mentally absent – that's presenteeism which costs businesses billions annually.

But I've also witnessed the positive side. When employees feel financially secure, they don't just show up – they excel. When the stress of unpaid bills or lack of savings isn't weighing them down, their focus sharpens, engagement increases, and productivity skyrockets. This results in a healthier, happier, and more committed workforce.

How I Recommend Boosting Employee Financial Health?

Financial health isn’t just a personal matter; it’s a workplace priority. Employees burdened by financial stress bring those worries to work, impacting their productivity and overall well-being. So, how can you help your team achieve financial peace of mind and reach their financial goals?

Let's explore some financial wellness benefits employers offer to support their workforce.

1. Assess Employees' Financial Lives

The first step is understanding your employees' financial challenges. Conduct anonymous surveys or host one-on-one sessions to identify their specific pain points. Are they struggling with debt, saving for emergencies, or simply making ends meet? The more you know, the better you can tailor your support.

2. Address Their Needs

With the insights gained, it's time to take action. Develop programs that address the diverse financial needs of your workforce. Some employees might need guidance on budgeting, while others could benefit from retirement planning or debt management tools. Customization is critical—one-size-fits-all solutions won't cut it.

3. Implement a Financial Wellness Program

Now that you have the data, implement a comprehensive financial wellness program to make a real impact. This should include budgeting tools, debt reduction strategies, savings plans, and financial counseling.

Offer tools like student loan optimization or employer-assisted emergency savings. Consider adding incentives, like rewards, to boost engagement and meet savings goals.

Did you know that 34% of low-income workers are unsure they can afford the healthcare they need? Address these issues head-on by providing options like salary-based contributions or low/no deductible plans. Programs that resonate with employees are the ones that make a difference.

4. Educate and Empower Your Employees

Financial literacy is crucial, but it's often lacking. Only 29% of workers have a written plan for retirement, and nearly half guess how much they need to save. Isn't it astonishing? Equip your employees with the knowledge they need to manage their finances effectively.

Help them by offering financial wellness tips, workshops and regular financial education sessions during onboarding and throughout the year. Invite financial experts or provide access to online learning resources. The better informed they are, the more confident they'll be in handling their finances, reducing stress and distraction at work.

Suggested Read: 12 Best Financial Literacy Books To Build Financial Confidence

5. Leverage Technology for Financial Health

Technology can be a powerful ally in improving financial health. Integrate financial management apps into your wellness programs to help employees track spending, budget effectively, and monitor their financial health. These tools make financial management more accessible and engaging.

6. Think Outside the Box: Offer Innovative Benefits

Think beyond the traditional benefits to stand out. How about offering subsidized meals or transportation? Did you know that 21% of employers already offer subsidized internet for remote workers? Or consider providing paid leave options that cater to all family structures, from bereavement to maternity or surrogacy leave.

These perks aren't just nice-to-have; they show your employees that you're invested in their financial and emotional well-being.

7. Evaluate, Listen, and Improve

Finally, never stop improving. Set up regular check-ins and surveys to see how your programs are performing. Are fewer employees asking for paycheck advances?

If yes, you're on the right track. But if things aren't going as planned, it's time to pivot. Listen to your employees, take their feedback seriously, and make the necessary tweaks. It's all about continuous improvement. When your employees thrive financially, your company does, too.

The Future of Financial Wellness in Workplace Well-being Programs

Financial wellness is evolving rapidly, and the workplace is at the forefront of this transformation. Let's glimpse the future—where financial wellness isn't just a checkbox but a dynamic, integral part of employee well-being.

1. Personalized Coaching Takes Center Stage

Personalized coaching is becoming a major trend. They are tailored to individual needs and are set to become a staple in future wellness programs.

It's like having a financial coach at your fingertips—someone who knows your unique financial situation and guides you through the twists and turns of money management. Companies that offer personalized financial coaching will significantly boost employee satisfaction and productivity.

2. AI Tools: Your Financial Assistant

Artificial Intelligence is set to revolutionize financial wellness programs. AI-driven tools can analyze spending habits, suggest savings strategies, and even predict financial pitfalls before they happen.

These tools are becoming more innovative, learning from user behavior to provide insights that were once reserved for financial advisors. In the future workplace, AI will become the go-to for instant, smart financial guidance.

3. The Integration of Financial Wellness with Overall Well-being

Financial wellness is no longer a standalone initiative. It's blending seamlessly into overall well-being initiatives. As companies realize that financial stress affects everything from mental health to job performance, they integrate financial wellness into their holistic approach to employee health.

4. Shaping the Future with Technology

Technology is the backbone of these emerging trends. With AI, apps, and digital tools, financial wellness is becoming more accessible and engaging for employees. The future is digital, and it’s transforming how we approach financial health.

5. The Role of Changing Workforce Demographics

Millennials and Gen Z are the majority in the workforce. These generations value transparency, digital access, and personalized experiences. They're not just looking for a paycheck—they're looking for financial stability and growth opportunities. Employers who tap into these needs will lead the way in workplace financial wellness.

6. Expert Prediction: A New Era of Financial Empowerment

Personal finance expert Jean Chatzky predicts that financial wellness programs will be as common and essential as health insurance in the next decade. Companies will offer more comprehensive benefits, helping employees build solid financial foundations. The focus will shift from reactive to proactive.

Source: Outlook 2024: Growing Your Wealth in an Uncertain World

Final Words

The future of financial wellness in the workplace will depend heavily on personalization, technology, and integration. Companies that embrace these trends will attract top talent and create a financially empowered workforce.